A charity is also an example of a social enterprise.
Charities are organisations that are set up for the benefit of the community.
They do not have to pay the same tax as other organisations as they qualify for tax advantages.
If they do make a profit, they must use it for the purposes of the charity.
To qualify as a charity, an organisation has to demonstrate that its purposes are for the public benefit.
There are many different sorts of public benefit for example, conservation or the looking after of abandoned pets.
Since charities must be established for the benefit of the public or a large part of it, a charity cannot be set up to support only a few people however, such as one ill pet.
A charity can be incorporated (set up with companies house in the same way as an LTD) or unincorporated.
Not all charities are registered but if the charity has an income of £10,000 or more it must register with the charities commission.
Charities with income exceeding £10,000 per year are also required to send annual accounts to the charities commission.
New charities find it difficult to fundraise
Trustees have the responsibility for running a charity, for example for its finances and the employment of staff or volunteers.
There are about 190,000 registered charities in the UK and many unregistered ones,so it is very hard for new charities to gain donations..
Trustees usually have to be over 18 unless the charity is incorporated.
Anyone that has been convicted of a criminal offence involving dishonesty or deception cannot become a trustee.
A charity must obtain a local authority licence before they are allowed to fundraise in public. They can however fundraise on private property with the permission of the owner.
A charity can also sell goods in order to raise money but the profit from sales must be used for the charitable purpose.
What exactly is a public benefit?
There are many different sorts of public benefit, but there can be a fine line in the word of the law between what can be accepted as a public benefit and what can’t.
Giving money or clothes to people in poverty would be to the public benefit but would this qualify if a charity was set up to help one family or one street?
Providing people with facilities for sport and recreation is acceptable but what if you wanted to set up a charity to fundraise to buy an all weather pitch for your amateur football team?
Caring for sick, injured or homeless animals meets the criterion but is it acceptable to create a charity to pay for the medical bills for your injured rabbit?
The list is endless but the crux of the matter is whether the benefit is offered to a significant proportion of the public,but what amounts to a significant amount?